According to a new report from Taiwanese publication Digitimes, Apple is gearing up to produce a 7.85-inch iPad. The rumored device is reportedly set to enter mass production by the third quarter of this year.

When Apple reveals iCloud at WWDC on Monday, it’ll have the kind of impact the iPod has had, predicts Kevin Fox, a Silicon Valley software veteran who’s worked at Apple, Yahoo and Google.

“The rumblings are huge,” says Fox, lead designer at Mozilla. Fox worked on Newton software before designing Yahoo’s chat service and then software for Google (including Gmail 1.0, Google Calendar 1.0, and Google Reader 2.0). He continues:

… given the complete failure of MobileMe over the last decade there’s no way Apple would introduce [iCloud] on such a pedestal unless it’s incredible. My guess is that iCloud is to MobileMe as iPhone was to Newton: a complete, deep, polished solution after an underwhelming market failure.